Discretionary Plan and Plan Administration

•   Incentive payouts are within the complete and sole discretion of the Company.

•   The Company will approve actual achievement of performance measures and individual awards based on actual achievement before awards are granted and paid, subject to the overall maximum incentive payout described below under “Maximum and Minimum Payout.”

•   The Company has the right to adjust any or all awards; this includes the right to eliminate any or all awards for any year despite achievement of performance measures, even if such decision is made after the end of the performance period.

•   The Company may modify, suspend, amend or terminate the STIP at any time.

•   With respect to any employee, the Company reserves the right to reduce or even cancel incentive awards in the event an employee has demonstrated a lower level of performance than expected, whether or not the performance levels have been met.

•   Each business unit needs to complete a performance review assessment for each employee to justify an award under the STIP.

•   Adjustments may be made to the financial metrics for closure costs, severance costs and similar items.

•   Adjustments may also be made to the cost metrics for specific reasons such as market downtime, major variation in grade mix, major changes in input price, etc.

•   Any adjustment to the performance metrics has to be formally approved before implementation.

•   Awards under the STIP are anticipated to be paid in a lump sum no later than March 15, 2012.

Performance Metrics – Weighting

Criteria

Income from operations (ABH)

Manufacturing costs¹

$

20 M

$

80 M

$

120 M

SG&A cost

Safety – OSHA rate²

Safety – Severity³

Targets based on cost of goods sold are set for the recycling division.

The calculation methodology for the mills/divisions varies from the calculation methodology for corporate.

Targets based on vehicle incident rate are set for the recycling division.

Weighting

Income from operations (ABH)

Manufacturing costs (mill)

SG&A cost or profit/metric ton

Safety – OSHA (mill/division) (ABH)

Safety – Severity (mill/division) (ABH)

For purpose of the STIP, free cash flow is defined as income from operations, adjusted for:

•  Cash interest

•  Cash reorganization costs

•  Depreciation

•  Pension funding

•  Cash taxes

•  Work capital variation

•  Maintenance capital expenditures

•  Other

•  If an employee is promoted or demoted to a position covered by a different incentive payout level, any incentive payout calculation will be prorated for time spent in respective positions. In either case, the base salary rate used to determine the prorated incentive payout will be the base salary rate in effect at December 31, 2011.

•  If an employee’s status changes from temporary to regular or union to non-union during the performance period, the employee will be eligible to participate for time spent as a regular or non-union employee, as the case may be, and any incentive payout calculation will be prorated for time spent as a regular or non-union employee, as the case may be. In either case, the base salary rate used to determine the prorated incentive payout will be the base salary rate in effect at December 31, 2011.

•  An employee who elects to retire, is involuntarily terminated for reasons other than cause, or who dies during the performance period will be entitled to receive a prorata amount of an incentive payout, based on actual achievement for time as an active eligible employee, if and when the Board approves the incentive payouts and does not otherwise cancel payment.

•  An employee who voluntarily resigns from the Company during the performance period (inclusive) will not be eligible to receive an award. An employee who voluntarily resigns from the Company after the performance period will remain eligible to receive an award, if and when the Company approves the incentive payouts and does not otherwise cancel payment.

•   An employee who is terminated for cause, as determined by the Company or his specific employer, in their discretion, whether during the performance period or after the performance period and before actual payouts, will not receive an award.

•   Maternity/parental/adoption leave: The length of the leave is not included in the calculation of any incentive payout.

•   Leave without pay: The length of the leave is not included in the calculation of any incentive payout.

•   Short-term absence due to illness: The length of the absence is included in the calculation of the incentive payout if it is a bona fide absence pursuant to the disability medical leave procedure.

•   Long-term absence due to illness (time on long-term disability): The length of the absence is not included in the calculation of the incentive payout.

/s/ Richard Garneau